Swedish municipalities have very different age structures. Migration from rural to urban areas has led to a polarisation of Swedish regions, where urban centres have an inflow of young and skilled workers while rural regions are ageing and falling behind economically. This thesis examines what effect population ageing has on output of Swedish municipalities and how that effect differs between urban and rural municipalities. By classifying all 290 municipalities as either rural or urban and dividing the population of each municipality into six age cohorts, a clear negative relation is found between the share of people aged 65 to 79 and gross regional product per capita in both types of municipalities. Surprisingly, this negative relation is not found for the share of people above 80. This group is positively related to output in urban municipalities, but not in rural ones. Overall, population ageing seems to be negative for economic growth in both urban and rural municipalities.